Zenith Bank is a well-known brand in the Nigerian banking industry, with a vision to become a leading global financial service provider. It’s reported to be the 6th biggest bank in Africa, with total assets exceeding N12.3 trillion. Its biggest competitors for share of mind are GTB, Access Bank and UBA.
Beyond the impressive numbers, whistles and bells, financial glamour, and obvious strengths, the Jim Ovia-founded Zenith Bank also has some major weaknesses that may not be immediately apparent.
What are they? And what are the internal and external factors that influence its success or standing?
In this first of our new series of SWOT analyses, we will examine Zenith Bank’s strengths, weaknesses, opportunities, and threats. This analysis will help us understand the bank’s competitive position, performance, prospects for growth, and its public relations and perception index.
The SWOT analysis of Zenith Bank: Strengths
Strong brand reputation
Zenith Bank is widely recognized as one of the most reputable and reliable banks in Nigeria, with a history of providing high-quality financial services to its customers.
Diversified product offerings
Zenith Bank offers a broad range of products and services, including corporate banking, retail banking, investment banking, and digital banking. This diversity helps mitigate risks and maximize profitability.
Strong financial performance
Zenith Bank has consistently reported strong financial results, with high profits, low default rates, and a healthy balance sheet. Its net income was over N624 billion, and profit before tax towered at over N284 billion.
This demonstrates the bank’s stability and financial strength. Depositors don’t have a reason to stay awake at night.
Solid customer base
Customers are the lifeblood of any institution. Zenith Banks ranks high, with the Group reporting almost 29 million customers and over 21 million issued ATM cards.
Good corporate governance
Zenith Bank has a strong corporate governance structure, which includes a robust risk management framework and an independent board of directors.
Innovation and technology
Zenith Bank Nigeria has invested heavily in digital banking platforms, including Internet banking, mobile banking, cards, and electronic channels.
The bank’s e-banking products and user-friendly mobile app have increased its customer base, transaction volume, revenue, and overall likability.
Adequate capital and liquidity
Zenith Bank Nigeria has a strong capital adequacy ratio of 23.8% as of December 2020, well above the regulatory minimum of 15%. The bank also has a high liquidity ratio of 66.2%, far exceeding the regulatory requirement of 30%.
Customer deposits also jumped from N6.4 trillion to over N8.9 trillion in its last reported results.
These ratios reflect the bank’s ability to withstand shocks and uncertainties in the financial market.
Zenith Bank’s weaknesses
Poor cost efficiencies and high operating expenses
Zenith Bank Nigeria has a high cost-to-income ratio of 50.9% as of December 2020, an increase over the previous year.
The bank’s operating expenses also jumped from N289 million to over N339.6 in the last operating year.
This reduces its profitability and competitiveness.
Limited international presence
Zenith Bank’s operations are primarily focused on Nigeria and a few other African countries. This limited international presence can limit the bank’s growth potential and exposure to new markets.
3. Sliding profit
While the fundamentals of Zenith Bank remain solid, its reported drop in profits in the last trading year indicates a major potential weakness.
Zenith reported a marginal growth of only 2% in profit before tax “attributable to a significant impairment charge on the back of the debt restructuring programme in Ghana.”
Profit after tax also dropped by 8% “due to an increase in income tax expense from the Nigerian operations.”
Low staff morale
Zenith Bank Nigeria has a large workforce of over 7,000 employees, but increasing staff turnover, relatively poor internal communications, and decreasing morale are some of the major concerns.
The bank also faces challenges in attracting and retaining top talent, especially in the digital and innovation areas.
Slow response to customer complaints
The public is generally dissatisfied with the quality of services provided by the banks and their dismal response to complaints. So, this is not peculiar to Zenith Bank alone.
But as one of the country’s biggest banks, this weakness becomes more glaring. Because greatness is a responsibility.
The International Centre for Investigative Reporting (ICIR) confirmed that four Nigerian commercial banks failed to resolve a total of 171,642 complaints from customers in 2021.
The total amount claimed in the complaints was N196.2 billion, but the banks refunded a total of N4.1 billion to customers. Zenith was one of the listed banks. The others are Guaranty Trust Bank (GTB), United Bank for Africa (UBA), and Access Bank.
No distinct product features and offerings
Zenith Bank Nigeria offers similar products and services as its competitors, without a distinct differentiation or value proposition.
This can be said of most of Nigerian banks, where the majority of the products and services are “me too!”
The latest news and other financial information about Zenith Bank are not immediately visible on its websites.
For example, on its corporate main website page, it says “the Bank grew its shareholder’s fund of ₦20 million in 1990 to ₦704.50 billion as of year-end 2016.”
Where are the figures for 2022-2023? What’s the bank’s current asset base and other vital statistics? These should be more obvious.
Opportunities for Zenith Bank
Expansion into new markets
Zenith Bank can explore opportunities to expand its operations into other international markets and regions with growing economies.
Its diaspora banking in Canada, the USA, and a few selected locations is a move in the right direction.
Increased digital banking
With the increasing demand for digital banking services, Zenith Bank can enhance its digital offerings and expand its reach in this area. It’s already demonstrating some leadership here. It can be further accelerated.
Developing specialized products
Zenith Bank can develop specialized products and services for specific customer segments, such as small businesses and high-net-worth individuals, to increase its market share.
Innovation doesn’t come easily. But it comes.
Zenith Bank can enter into strategic partnerships with other financial institutions and technology companies to enhance its offerings and expand its reach.
Strategic and sophisticated communications
Zenith Bank has high scores with its CNN adverts, Christmas street lighting program, and some other communications initiatives.
However, there are opportunities for more creative initiatives, proactive public relations, and strategic communications. as well as updating all information platforms.
Zenith Bank’s threats
The Nigerian banking industry is highly competitive, and Zenith Bank faces competition from both local and international banks, as well as the more nimble financial institutions that are entering the market.
The Nigerian banking sector is overdue for disruption. And the traditional banks, including Zenith, should be on the lookout.
Any significant economic downturn in Nigeria or other African countries where Zenith Bank operates could negatively impact the bank’s profitability.
As with any financial institution, Zenith Bank is vulnerable to cybersecurity threats, which can result in financial losses and damage to its reputation.
Changing customer preferences
As customer preferences and behavior change, Zenith Bank may need to adjust its product and service offerings to remain competitive.
As with other Nigerian banks, Zenith Bank faces significant regulatory challenges, including high capital requirements and frequent changes in the regulatory environment.
Major policy somersaults can pose an existential threat to Zenith Bank
Zenith Bank’s public relations scorecard and top 3 takeaways
Increase the share of voice and share of mind for the Zenith Bank brand by using more creative approaches and capitalizing on the existing brand equity.
Redefine and pursue a “blue ocean strategy” by leveraging on existing strengths and creating more distinct products, services, and uncontested marketplaces
Develop more proactive and less predictable activations for public relations, corporate social responsibility (CSR), and media relations.
Overall goodwill and public relations score for Zenith Bank on a scale of 1-10?
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